Are You Financially Prepared for a Critical Illness?

Getting sick is inevitable, but you can prepare for it

By Kaydee Dela Buena

critical illness
Like the many unpredictable things life can throw at you, no one is safe from getting sick. Unexpected medical emergencies not only affect your well-being, but can also impede your financial planning. More so if you happen to be unfortunately hit with a critical illness. Just imagine the financial implications needed for treatment, which for some has led to losing all their money. That is, if you don’t have insurance to back you up. With so many available insurance companies in the Philippines, you’re bound to find the best one that’ll fit your needs. 

First, what is a critical illness? 
Simply put, critical illness is a life-threatening condition, which can impair your ability to live properly and if left untreated, can result in death. According to a 2016 report by the Philippine Statistics Office, heart diseases, cancer, and pneumonia were the top causes of death in the country. Out of 582,183 registered deaths in the same year, 74,134 cases were attributed to acute heart disease; 60, 470 for cancer; and 57, 809 for pneumonia. Tuberculosis and diabetes were also included in the list. Owing to factors such as lifestyle, eating habits, sleep patterns, exercise routines, and even genetic disposition, no matter the age, everyone is equally susceptible to critical illnesses. 

What critical illness means to you and your loved ones 
Without question, critical illness is a source of physical and emotional distress, and places a huge burden on your household finances. The expenses involved in this type of situation is no laughing matter. Aside from medical bills, you’ll also have to face hospitalization costs, post-treatment care, and home care expenses. Are you capable of carrying these financial obligations? 

A solid, comprehensive critical illness insurance plan is one of the best ways to stay secured. In the Philippines, the public insurance system covers 85% of the working class. Some private companies also provide their employees with life insurance policies like HMO, which are added benefits. Critical illness coverage is usually an add-on to an existing insurance policy that cushions high costs of life-threatening diseases.

Defining critical illness insurance
Critical illness insurance compensates a lump sum of payment after getting diagnosed. The best health insurance should cover incidental expenses including loss of income during the treatment and recovery period. In this way, you and your loved ones are given one less problem to worry about, allowing you to focus your time and effort into getting better.

Conditions such as multiple sclerosis, certain types and stages of cancer, stroke, and heart attack are just a few examples of illnesses that might be covered by this type of insurance. Keep in mind that for each illness, there’s a set of criteria that you’ll have to meet in order to qualify for the payout. While not all medical insurance policies cover different stages of these diseases, the premium paid over the effectivity of the policy is already a considerable amount. This excludes taxes, rider premium, modal loadings, extra underwriting premiums, etc. 

Factors determining the cost of coverage 

Age
This is probably the most significant factor in determining how much the policy will cover your needs. As a rule of thumb, buying a critical illness plan at a younger age will generate nominal cost. For example, a 30-year-old who applies for a 20-year term policy will pay less than a 50-year-old who buys the same coverage.
 
Medical history
Insurance companies will also look at your current health condition as well as medical history. You’re bound to secure a more affordable coverage if you are young, in good health, and have no pre-existing critical conditions. 
 
Smoker vs. Non-Smoker
Smoking comes with additional health risks such as lung cancer, heart disease, and respiratory problems. These concerns are considered as high-risks, so insurance companies may increase premiums to cover potential payment. Worst case scenario would be insurers might decide to not cover you at all. 
 
Payout amount
If you insist on having a higher payout amount, then expect your premiums to be higher, too.  

Choosing to pay out of the pocket once diagnosed may deplete your life-long savings so better to invest in a proper coverage so as not to leave you bankrupt and suffering. Consider setting up a meeting with a financial advisor to assist you in securing the right plan with your needs and budget in check.